The companies anticipate that the merger will result in “synergies” in excess of £35 million per year, predominantly from cost reductions including the combination of headquarters and back-office functions such as HR, the consolidation of IT systems, some shop closures and the streamlining of supplier contracts.

Peter Marks, chief executive of the Co-operative, admitted that some jobs cuts from the 9,000-strong combined workforce would be “inevitable”.

However, retail union Usdaw said it was “very positive” about the merger, believing that it will help secure the long term future of the Co-operative’s travel businesses and maintain its presence on the high street.

Sharon Ainsworth, national officer, said: “While there will obviously now be some uncertainty for our members, I do not think the announcement will have come as a complete surprise to them as they are fully aware of the challenges the travel industry has faced over the past few years.

“Usdaw will have full consultations with the Co-operative Group over the coming months and our key aim will be to secure as many jobs as possible and to support and represent our members throughout this period of change.”

Subject to clearance by European Commission regulatory authorities, the new joint venture is expected to start operations by Christmas this year.